Cyprus readies plan B in bid to secure bailout

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THE President of Cyprus is today expected to present a so-called “Plan B” to avoid a financial meltdown after the island rejected the terms of an EU bailout.

Proposals expected to be included are potentially nationalising pension funds and the issuance of an emergency bond based on future gas revenues, trying to raise €5.8bn (£4.9bn) as a condition for securing a €10bn bailout from the European Union.

Officials are believed to have also spoken of reviving the rejected plan for a levy on bank deposits, though at a lower level than first proposed.

The new bill could be voted on as early as this evening, an official said last night.

The ruling party, Democratic Rally, last night warned time was running out: “We don’t have days or weeks, we have only hours to save our country,” deputy leader Averos Neophytou said.

The wrangling over details of a fresh bailout plan, came as Cyprus yesterday pleaded for a new loan from Russia.

Finance minister Michael Sarris said in Moscow he had reached no deal with his Russian counterpart Anton Siluanov, but that talks would continue.

Russia’s finance ministry said Nicosia had sought a further €5bn on top of a five-year extension and lower interest on an existing €2.5bn.

Meanwhile Russian Prime Minister Dmitry Medvedev slammed the EU and Cyprus’s attempts to thrash out a deal as resembling a bull in a china shop.

He told reporters that “every possible mistake that one could have made has already been made”.

Cyprus has to seek Moscow's help after the Eurozone’s plan for a €10bn bailout was cast into disarray on Tuesday when the island’s parliament rebuffed EU demands for a levy on bank deposits to raise €5.8bn.

Cypriot officials disclosed that the country’s energy minister was also in Moscow, ostensibly for a tourism exhibition, fuelling speculation that access to offshore gas reserves could be part of any deal for Russian aid.

Cyprus has found big gas fields in its waters adjoining Israel but has yet to develop them.